AerCap Holdings NV (AER) announced it will acquire Genesis Lease Ltd. (GLS) in a $300 million all-stock merger of European aircraft-leasing companies.
Genesis disclosed Monday it was in merger talks with an unnamed partner, but a trade publication said AerCap was expected to make a takeover offer.
The bid is one AerCap share for each Genesis share. AerCap shares closed Thursday at $8.81 and Genesis American depositary shares ended at $8.45. Genesis holders would own 29% of the combined company.
Based on Gensis’ balance sheet, the companies said the deal is worth $1.75 billion.
The deal comes as credit markets remained constrained, limiting the ability to roll over debt. International Lease Finance Corp. has seen its borrowing costs triple because of the credit crisis, according to a recent report by CreditSights, and needs to deal with $18 billion of debt coming due the next three years that bond investors aren’t willing to refinance.
Following the deal, AerCap would have 116 airline customers in 50 countries and a lease portfolio currently valued at $6 billion, said Chief Executive Klaus Heinemann.
General Electric Co.’s (GE) aviation-financing business has been servicing Genesis’ portfolio, but GE has agreed to let the deal be ended at AerCap’s option.
Industry watchers said earlier this week that a deal between AerCap and Genesis makes sense. Since both companies are in good financial condition, the move would form a larger company with more industry clout. Both companies have said that, given the relative young age of their fleets, they have had no trouble placing leased aircraft with airlines around the world.
-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354; email@example.com